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It’s off! Xerox terminates Fujifilm deal

US printer and photocopy maker Xerox Corp has called off its proposed $6.1 billion agreement with Japan’s Fujifilm Holdings and signed a new settlement with activist shareholders Carl Icahn and Darren Deason, who had sued to block the Fujifilm takeover deal. Xerox CEO Jeff Jacobson has resigned, along with five other board members.

Outgoing Xerox CEO Jeff Jacobson.

In its statement announcing the latest twist in an ongoing saga that has seen Jacobson forced to resign before being reinstated and now forced to resign again, Xerox said:

The previously announced transaction agreement to combine Xerox with Fuji Xerox is being terminated in accordance with its terms due to, among other things, the failure by Fujifilm to deliver the audited financials of Fuji Xerox by April 15, 2018 and the material deviations reflected in the audited financials of Fuji Xerox, when delivered, from the unaudited financial statements of Fuji Xerox and its subsidiaries provided to Xerox prior to the date of the Subscription Agreement and taking into account other circumstances limiting the ability of the Company, Fujifilm and Fuji Xerox to consummate a transaction.

Incoming Xerox CEO John Visentin.

Billionaire activist shareholders Carl Icahn and Darren Deason have been welcomed back into the fold with a new agreement that Xerox hopes will end months of in-fighting.

Xerox entered into a new settlement agreement with Carl Icahn and Darwin Deason. The settlement agreement resolves the pending proxy contest in connection with the company’s 2018 Annual Meeting of Shareholders and Mr. Deason’s litigation against Xerox and its directors. It does not affect any claims of Mr. Deason or other Xerox shareholders against Fujifilm for aiding and abetting.

Icahn ally John Visentin is expected to be named the new Xerox CEO. Under the terms of the new settlement, Visentin is one of five new board members, alongside Jonathan Christodoro, Keith Cozza, Nicholas Graziano and Scott Letier.

Keith Cozza, the Chief Executive Officer of Icahn Enterprises L.P., is expected to be appointed as the new Chairman of the Board of Directors of Xerox, and John Visentin is expected to be appointed as the Vice Chairman and new Chief Executive Officer of Xerox.

As part of the agreement, Xerox and Carl Icahn will withdraw their nominations of other director candidates for election at the 2018 Annual Meeting of Shareholders, which will be postponed to a later date.

The new Board of Directors plans to meet immediately and evaluate all strategic alternatives “to maximize shareholder value.”

Icahn welcomed the news. “We are extremely pleased that Xerox finally terminated the ill-advised scheme to cede control of the company to Fujifilm,” he said. “With that behind us and new shareholder-focused leadership in place, today marks a new beginning for Xerox. We have often said that the most important person at a company (by far) is the CEO. We are therefore also pleased that John Visentin, a tried and true veteran in this area, will be taking the helm.”

Darwin Deason said the company can now conduct “a true, robust strategic alternatives process. John Visentin has spent weeks preparing himself to run the company and speaking to numerous market participants regarding strategic alternatives. Xerox is fortunate to have someone with his experience and preparation to lead it through this exciting and transformative time.”

Fujifilm currently owns 75% of Fuji Xerox, a joint venture launched more than 50 years ago. Under the original deal announced in February, Fujifilm said it planned to cut 10,000 jobs at Fuji Xerox in the Asia Pacific region by March 2020.